Let’s imagine for a moment that Premier Danielle Smith’s government announces a seven-month development moratorium for new oil and gas projects.
Without consulting or warning the oilpatch. You can imagine the reaction in Alberta.
Yet, this is exactly what happened to the energy industry last week. Just a different branch of that industry.
The reaction in the renewable energy industry was like an earthquake. To say there was surprise and concern would be an understatement. Anyone in the business world would understand that reaction, especially if your industry had been humming along and gaining speed right before the announcement.
Now, everything has come to a screeching halt and confusion reigns. It’s not hard to imagine what this does to the investment climate.
And here’s the thing about the renewable energy industry. It’s mobile. It has options.
Most of the wind and solar power in Alberta is built on behalf of large companies, such as Amazon and TC Energy, who want to hit their sustainability goals and reduce carbon emissions.
The benefits to Alberta, and Albertans, have been enormous. Since 2019, almost $4.7 billion has been invested in this province due to corporate purchases of renewable energy. This has meant thousands of jobs, tax revenues to municipalities, and lease payments to landowners. That development in Alberta is the envy of the nation.
But these large companies, many of which are national or multinational, do not need to build in Alberta. Alberta’s open market has, until now, certainly made it easier to build here than in other provinces. But those other provinces have eyed the economic benefits seen here and are moving rapidly to open their markets to corporations that want clean energy. These companies could also move to the U.S. or other more welcoming markets around the world.
Companies like stable and consistent policies. And they need long lead times for changes so they can strategically plan and invest. They did not get any of that prior to the surprise announcement.
At a minimum, a basic consultation process would have prevented some of the chaos unleashed by this unexpected moratorium. This surprise could legitimately cause every industry to wonder “are we next?” and raises the cost of capital when doing business in the province.
There is now a real risk that renewable energy investment will shift away from Alberta. Many companies have deadlines for their sustainability targets. They want to hit the net-zero emissions mark by a certain year, and those timelines are rapidly approaching. Would you plan a project for Alberta if you already know construction takes a year, and you have no idea what the rules will be at the end of seven months?
We believe the moratorium is a mistake — an unforced error, if you will.
Of course, concerns of rural landowners and municipalities should always be addressed. The renewable energy industry wants to do whatever it can to work with the communities where development takes place. We believe the rules being developed should be strong, fair and consistent with other land uses.
But the government could have chosen to let their inquiry and criteria development occur with as little disruption to the industry as possible. They have managed this with other types of land use, including Alberta Energy’s review of coal bed methane development in 2003. There was no pause imposed then. Nor has the Alberta government ever considered pausing oilsands development, despite the pace of development or variety of issues raised there.
The Government of Alberta needs to remove the unnecessary and costly moratorium on renewable energy development and utilize existing regulatory processes to address concerns. This moratorium suddenly halts a stable and prosperous market, threatens investment decisions and introduces a significant level of uncertainty around how “open for business” Alberta truly is.
Jorden Dye is acting director of the Business Renewables Centre of Canada. The Business Renewables Centre of Canada is a non-profit organization that accelerates the growth of renewable energy by bringing buyers and developers together and offering educational guides to ease the learning curve. Almost 60 corporations from a variety of sectors are part of this community.